Starting a Business? What You Need to Know About Bookkeeping

Filed Under (Bookkeeping) by moirapottow on 14-01-2009

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Author: Lynn Watson

If you are setting up in business then you should make sure you get organised from day one as far as bookkeeping goes so as to avoid any future issues with HM Revenue and Customs (HMRC).

Good bookkeeping will also allow you to plan ahead financially by showing you where the majority of your income and expenditure lies so that you can capitalise on profitable sales and work on minimising your outgoings. And of course, an accurate set of books will ensure you do not pay more tax than is necessary.

There are a number of records that you must keep, whether you are a sole trader or an employer of many. Firstly you need to keep a record of all your income and copies of all invoices you have issued. You also need to maintain records of your outgoings and copies of invoices you have paid for goods or services needed for your business.

Your tax liability is based on your profit and loss which is calculated from your income and expenditure. For this reason, keeping track of this information as you go along is crucial because if you leave it, everything will mount up and before you know it, it will be time to file your tax return and you will have a major task on your hands.

You will also need to keep copies of or have online access to your business bank accounts and statements together with details of any amounts you personally take out of or pay into the business.

Other things that you should keep on file are:

  • Petty cash book
  • Till rolls
  • Electronic or internet sales records
  • Stock take report
  • Cheque stubs
  • Paying in slips
  • Records of interest earned on savings accounts
  • Details of any income in addition to your main business income

If you hire the services of an accountant to prepare your accounts they will charge you based on the amount of work they need to do. If you simply hand them a carrier bag filled with crumpled receipts then as you can imagine, they will have a lengthy job on their hands and your resulting bill will reflect this. The more you are able to prepare in advance, the less your accountants’ fees will be.

Smaller businesses generally find that hiring the services of a bookkeeping company is money well spent because it can ease the burden of taking care of day to day accounts paperwork so that time is freed up to concentrate on running the business. Bookkeeping firms will make sure your books are kept up to date and will get them ‘accountant ready’ for you. They will also make sure that you are maximising your taxable expenditure and that you don’t miss crucial filing and payment deadlines. So by hiring a professional bookkeeper, there is money to be saved all round!

About the Author:

Lynn Watson is the Director of Office Assistants, a company certified by the Institute of Certified Bookkeepers. They offer small to medium businesses of all types the chance to cherry pick from a flexible range of services including bookkeeping; VAT; Payroll; CIS returns and general office services. The company has 20 years experience and pure expertise in streamlining systems and making substantial savings for all types of Essex and London businesses from sole traders upwards. For more information visit www.officeassistants.org

Article Source: http://www.articlesbase.com/accounting-articles/starting-a-business-what-you-need-to-know-about-bookkeeping-688737.html